OIL PRICES FALL AROUND 1.5 PERCENT DUE TO RECESSION RISK

SARAJEVO, (Patria) - Oil prices fell on world markets last week as traders feared that the slowdown in the growth of the world's largest economies would cause a decline in demand for 'black gold'.

The price of a barrel on the London market fell by 1.5 percent last week, to $96.72, while on the American market, a barrel fell by 1.45 percent, to $90.77.

Oil prices have been fluctuating in a narrow range in recent days because the situation in the world's largest economies is not enviable.

The American economy is technically in recession, and the eurozone is threatened by recession due to the energy crisis, while the growth of Asian economies, especially China's, is slowing down.

'The main concerns currently are global recession and weakening demand, given the weak data from the US, the eurozone, and China. There are signs of slowing economic growth, which could reduce oil demand,' PVM analysts stated in a review of the market situation.

Traders also fear further slowdowns in the growth of the world's largest economies, as further interest rate hikes are expected in the US and the eurozone, given that central banks must curb excessively high inflation.

A strong dollar also negatively affects prices
In addition, a strong dollar negatively affects prices because it makes oil more expensive for buyers in other currencies.

The dollar index, which shows the movement of the value of the US dollar against the other six most important world currencies, jumped 2.2 percent last week, to 108.00 points, its highest level in more than a month.

'A prolonged trend of a strong dollar would represent one of the biggest obstacles to a sustainable rise in oil prices,' said Jim Ritterbusch of Ritterbusch and Associates.

On the other hand, prices were supported by a sharp drop in US inventories last week, as companies found buyers in European countries looking for a replacement for Russian oil ahead of the European Union's sanctions against Russia, which come into effect on December 5.

US exports jumped to a record five million barrels per day.

'We estimate that the EU will need to replace 1.2 million barrels per day of imports from Russia with crude oil from other regions,' advisory firm FGE stated in a note.

After rising by more than 50 percent last year, thanks to the global economy's recovery from the coronavirus crisis, oil prices have risen by slightly more than 20 percent since the beginning of this year, mainly due to the war in Ukraine.

(Hina, Index.hr, NAP)